Big News in Santa Fe Commercial Real Estate Market

The New Mexican

Looking at the commercial real-estate market, Santa Fe has seen several significant additions during the past year. Several others will be realized in the year to come, and one of the most satisfying is at DeVargas Center. The large space that has sat conspicuously vacant since Albertson’s left it to build a new store six years ago will be taken by Sunflower Farmers Market.

The company, which offers consumers “the highest quality natural and organic products at the lowest possible price,” just started up in 2002 and already has 20 stores in six states — at last count on Nov. 25. Sunflower will open two in Santa Fe: the DeVargas store is scheduled to open in March and another store in San Isidro Plaza at the south end of town will open its doors in May or June.

The biggest deal downtown in the last year is the completion of the Santa Fe Community Convention Center. The 72,000-square-foot building replaced Sweeney Center, which began life as a gymnasium in the early 1950s, back when Santa Fe High School was next door. The beautiful, new convention center is already busy with weddings, a scheduled Christmas party, proms and graduation parties, and meetings small and large: 2,000 guests are expected for a meeting of the Society for Applied Anthropology in March, and nearly that many for the June 2010 joint meeting of the North American Benthological Society and an organization called Advancing the Science of Limnology and Oceanography.

Nearby, at the corner of Lincoln and Marcy, a major remodel of the 25-year-old La Esquina Building took place as the convention center was going up. Viola “Vee” Bybee and her husband built La Esquina, a 5-story office building, in 1982. “That was the tallest building downtown then,” Viola said in a 2005 interview. “It couldn’t be any taller than the cathedral. That’s what they told you.”

The remodeled, 24,000-square-foot building is now called Dos Mundos de Santa Fe. The bottom two floors are for lease as retail space; the first tenant, Galerie Rue Toulouse, opened last month. Office condominiums on the third floor and residential units on the the top two floors are all for sale.

Big, big news this month is the start of New Mexico Rail Runner Express service between Albuquerque and Santa Fe. The traffic impact of eight passenger trains a day running through town won’t be known until service begins in mid-December, but it has been interesting watching the construction of the railroad over the past 15 months.

The work involved 18 miles of new track and four miles of replacement track on the section to be shared with the Santa Fe Southern Railway. It’s all continuous welded rail on concrete sleepers (ties). “That is the standard now in railway construction,” said Rail Runner project manager Chris Blewett. (Traditional track was built with 39-foot lengths of rail anchored in wooden sleepers with spikes.)

The first priority is weekday service, but hopefully it won’t be too long before Friday-evening and Saturday service is added; draft schedules can be viewed at

There will ultimately be at least four Santa Fe station stops. Two will be ready when service begins: one at the old depot in the Santa Fe Railyard and one at the South Capitol Complex, between Cordova and Alta Vista, which is now under construction. “That will be a canopy with two platforms, one on either side of the track,” Blewett said. “We’re also building a pretty substantial bus island there for New Mexico Park & Ride and Santa Fe Trails.”

The Santa Fe Railyard saw the most intensive development in the city during the past year. Newly constructed are the Market Station building (85,000 square feet) that opened with its anchor tenant, REI, in September; Warehouse 21 (16,385 square feet); Santa Fe Farmers’ Market (26,000 square feet); and the first of a planned three ArtYard live-work buildings by Don Wiviott.

Pojoaque Pueblo’s Buffalo Thunder Resort & Casino, which opened in early September, is basically a city in itself, with a 395-room Hilton Hotel, a 61,000-square-foot casino, and a 36-hole golf course, as well as restaurants, nightclubs, tennis courts, shops, and convention halls.

At 102,000 square feet, the new Thornburg office will accommodate the approximately 400 people who work for Thornburg Investment Management and Thornburg Mortgage. The handsome building, designed by Ricardo Legorreta, is on a 14-acre site on Ridgetop Road. A phased move-in is planned during January and February.

Another exodus is about to take place with the opening this month of a new, 45,000-square-foot Santa Fe County Public Works complex, located near the N.M. 599/Airport Road intersection. The nine buildings of the $16.4 million project glisten with glass and corrugated steel. Everything makes use of passive-solar heating, natural lighting and ventilation, plus there’s a tall wind turbine to help power the facility. Architect Michael Freeman said it is expected to be “one of the most energy-efficient facilities of its type in the country.”

There are lots of restaurants now at San Isidro Plaza, the three-year-old project that is anchored by Lowe’s Home Improvement and Regal’s Santa Fe Stadium 14 cineplex. Joining Josh’s Barbecue, Tribes Coffee House, and Wild Wild Wok are El Milagro New Mexican Restaurant, Tacos Los Idolos, Cleopatra Café, and Patsy’s New York Pizza. Non-food businesses there include Kate Brennan Shoes & Such, Massage Envy, and Pro Nail.

Coming soon to San Isidro Plaza are Sunflower Farmers’ Market, Good Feet, Burger King, Plaza Café, Postal Connections, and Santa Fe Capitol Grill.

“The market is soft but we’re still getting calls,” said San Isidro developer Columbus Capitol LLC’s Mark Ruhlman. “We’re not getting calls from nationals, but we are from locals. We’re slowly but surely filling up our space.”

The first manifestation of San Isidro Plaza’s second phase was the city’s fourth Starbucks, a drive-through store at the corner of Zafarano and Cerrillos Road. Other new coffee shops in town include Latitudes Espresso and Ice Cream at 228 Old Santa Fe Trail and Station at the Railyard in the historic Gross Kelly Warehouse on Guadalupe Street. On Marcy Street, espresso/gelato specialist Ecco is set to expand into remodeled space next door (formerly Quintana Optical) and begin offering fresh sandwiches and salads.

Newcomers in the past year at DeVargas Center are Oz, which sells trendy clothing and gifts; The Gilded Page, offering stationery and cards; and Santa Fe Music & Piano. Katy Fitzgerald, the mall’s manager with Weingarten Realty Management Company, said a New Mexican-menu restaurant is renovating the space left vacant with the departure of Diego’s. And Travelers Market, which also has the large space at the rear of the mall next to Carl & Sandra’s Gym, is taking the DeVargas space formerly occupied by Las Cosas and then REI.

Troubles stemming from the national financial crisis are perhaps more apparent at Santa Fe Place, the city’s other mall, where two retailers are going out of business. The mall, which opened in 1985, is losing one of its anchors, Mervyn’s (over 62,000 square feet) and another large retailer, Shoe Pavilion (more than 15,700 square feet).

Motherhood Maternity is a new tenant and mall manager Beth Riebschlager said there are “some leases in the works that we can’t mention yet.”

Nearby, Harley Davidson relocated into bigger quarters in the former Toys R Us building at 4360 Rodeo Road and Staples opened in the former Old Navy space at Plaza Santa Fe.

Natural Sleep has hung a “Going Out of Business” sign. This location at the corner of Cerrillos Road and Baca Street was site of Mattresses Direct Futons & More and before that Comfortzone Futons & More going back to the 1980s.

Here’s hoping we don’t lose American Home Furnishings, whose parent company filed for Chapter 11 bankruptcy in late October. A Nov. 18 article at the online Home Furnishings Business journal said the Albuquerque-based retailer planned to close its six Arizona stores, consolidate three stores in Albuquerque into one, and keep open the Santa Fe and Farmington stores.

Pete’s Pets has closed after 28 years in business — the coming of big-box nationals PetSmart and PETCO a few years ago certainly didn’t help the local business. Grubb & Ellis is listing the building for $1,215,000.

Grubb & Ellis’ John Shepler said his company is working on a deal with a banking institution for the former site of Carrow’s Restaurant on St. Michael’s Drive.

A big listing for Grubb & Ellis is the New Mexico Academy for Sciences & Mathematics, which closed after 10 years. The 26-acre property, which holds several buildings and a swimming pool, is available for $9.7 million.

“I am really busy,” Shepler said. “We haven’t been subject to the same stress that the residential market has. Commercial is a necessity for business, to a certain degree, so you don’t have quite that volatility based on disposable income.

“Santa Fe doesn’t have the huge peaks but we don’t have the huge valleys, either. Albuquerque has had real good momentum coming into this recession and chances are it will recover very quickly. There was so much inertia in Albuquerque that we benefit by proxy from that.”

Over at Branch Realty, Joaquin Sanchez said the company is very busy with leases. “Leasing and buying activity is mostly under 2,500 square feet in general and that’s keeping us afloat,” he said. “There’s not much retail right now, but it seems to be quite busy with office/medical users relocating and opening in the hospital area.”

Branch Realty did the deal to bring the New Mexico Heart Institute to Pacheco Street, next to the post office. The Albuquerque-based institute built a new 15,300-square-foot facility there.

Dentist William Parker developed a substantial office/residential building called Cedar Park between Galisteo Street and St. Francis Drive. On the other side of St. Francis, the four-story apartment building Tres Santos opened last summer. It offers 136 below-market-rate apartments for the over-40 set.

Looking ahead to projects expected to open in 2009, the big one downtown is the New Mexico History Museum, a 96,000-square-foot building going up behind the Palace of the Governors. The price tag on the structure itself is $28 million. It will take another $6.5 million to build the exhibits.

Palace of the Governors deputy director John McCarthy was not ambiguous about the museum’s anticipated opening date. “We will open on May 23, 2009,” he said.

Concerning the planned redevelopment of the old St. Vincent Hospital and Marian Hall property, Drury Hotels project manager Brian Nenninger said fall 2009 is the earliest that construction might begin. Drury will develop two smaller hotels, because one large hotel is considered inappropriate for the site.

The 1954 hospital structure (the Villa Rivera building) will be renovated and expanded as a Drury Plaza Hotel with 175 rooms. Marian Hall will become a boutique hotel with 35 rooms. Drury wants to build porches on the west and south facades, as the 1910 building originally had. There will also be about 65 suites developed as freestanding casitas in the parking lot just south of Marian Hall.

“We will do underground parking and the current parking lot will be turned into new construction and parkscape, with the idea of extending Cathedral Park up into the development,” Nenninger said.

The Drury project is immediately adjacent to a major mixed-use proposal for the 5.5-acre Archdiocese of Santa Fe property southeast of the Cathedral Basilica of St. Francis of Assisi. For the project it calls Paseo de Santa Fe, the Hunt Development Group wants to develop over 132,000 square feet of retail uses and restaurants, and 112,000 square feet of condominiums and lofts, as well as three levels of underground parking.

Regarding the timeline on Paseo de Santa Fe, the company’s Jim Dobbie said, “We will be going through the approval process in 2009 and we’ll see where the project ends up.”

Down on Sandoval Street, Bradbury Stamm hopes to break ground in the next month or so on the $38,112,000 First Judicial District Courthouse. The project is due to be completed in 2011.

And what else is coming to the big Market Station building at the Railyard? A Flying Star Café, for one. Lindsay Lancaster, marketing director for Flying Star Cafe & Satellite Coffee, said they look forward to opening in early spring 2009. Allen Branch, one of the developers of Market Station, said five more businesses should be in there in 2009: Bin 132 Wine & Cheese Bar; The Dog House, an outdoor, seasonal bar; Daniela’s Ultimate Closet, a women’s clothing outlet; Ringside Entertainment, a sports bar and eight-lane bowling lounge; and an Apple store. “Apple came to us and we’re on the agenda for 2009,” Branch said.

The Maya Cinema movieplex to be constructed just to the south will have 10 screens below ground and three on street level. One of the screens will be IMAX-capable. There is also a plan to provide an over-21, scene at night in the upstairs theaters, where filmgoers will be able to enjoy beer and wine, and sushi and other special food items, while watching movies. Branch said he anticipates the moviehouse will be open by Christmas 2009.

Greer Enterprises has two downtown proposals in the works — presumably still in the works: numerous calls for an update were not returned. Villas at the Lensic, a 4-story condominium project just west of the Lensic Performing Arts Center; and a mixed-use development between First National Bank and the historic Felipe Delgado House.

The capitol parking structure now under construction near the Roundhouse will have 600 parking spaces. It won’t just be a big box.

“We’ve been working with the Historic [Design Review] Board to make it fit more within the historic style,” said Ted Grumblatt with FBT Architects, Albuquerque. “It follows the Territorial Revival style and, given the size of the structure, the massing has been broken down to provide relief as it faces Paseo de Peralta.”

The parking garage is scheduled to be complete in mid-April.

Eric Blinman, director of the Museum of New Mexico’s Office of Archaeolo gical Studies, said plans for the new Center for New Mexico Archaeology were being reviewed by the State Construction Industries Division and he expected it would go out to bid by early December.

Funds for Phase 1, the 18,500-square-foot portion of the facility that will be designed to house the archaeological collections, are in hand. Phase 2, which will provide offices and labs for OAS staff, will be about 16,000 square feet. Both the collections and the staff have been in substandard quarters for years. Blinman said the most optimistic finish date is mid-2010.

The massive Buckman Direct Diversion Project is now under construction. CH2M Hill and Western Summit Constructors will build a water-diversion structure on the Rio Grande, a raw-water lift station, a sand-removal facility, 11 miles of raw-water pipelines, two booster stations to pump the water approximately 1,100 vertical feet, a water treatment plant, two new treated-water pump stations, and 15 miles of clean-water pipelines to connect into city and county water-distribution systems. The project, which could cost as much as $230 million, should be operational in 2011.

Phase One Realty is working on plans for the Las Estrellas village center. The company’s Bruce Geiss said the center will include “neighborhood services, mixed use with possibly a day-care center, a health club, and food and coffee venues.”

Las Estrellas is a residential development in the old Santa Fe Estates master-plan area north of U.S. 84/285. Within the 550-acre site is 14 acres identified for commercial development. Phase One sold half of that land to Thornburg for its new office building and is developing the village center on the remainder.

Realtor David Barker plans to break ground in the spring on a 35,000-square-foot medical office building next to Physicians Medical Center in the Rodeo Business Park. Another building of 17,000 square feet remains to be built there by SF Brown Real Estate, which has developed much of the business park in recent years.

SF Brown’s Siler Studios project is also coming to a close. Marc Bertram reports that the New Mexico Environment Department moved into its new 22,000-square-foot building in the past year and SF Brown recently broke ground on the project’s final building: a 9,000-square-foot structure to house the State Pharmacy for the Department of Health.

Bertram also is focusing on Zia Station, a proposed mixed-use development built around a New Mexico Rail Runner stop. “We had a plan and design drawn up that includes about 350,000 square feet of office, 220 housing units, and approximately 70,000 square feet of neighborhood retail,” he said recently. “The Department of Transportation is working on a train-station platform there, but the train will not stop there initially because the land is owned by us and until we get some clarity from the city as to what the project will look like from an approval basis, we don’t want people trespassing all over without some control and some organization.

“This is going to be the first transit-oriented development in the state, and we think it will be a wonderful project as a gateway to the city from St. Francis Drive,” Bertram said. “And thank God we’re not trying to bring it to market today. O ur best guess is that we will develop this in six or seven phases over the next 10 to 15 years.”

First National Bank of Santa Fe hopes to begin construction on a new branch of 10,080 square feet in the spring. The site is at the corner of Cerrillos Road and Governor Miles Road. Los Alamos National Bank plans to build its third Santa Fe branch next year at Cerrillos Road and Vegas Verdes.

A new Fire Station No. 3 is being built now next to Ashbaugh Park on Cerrillos Road. The building, at 10,605 square feet, will be four times larger than the existing fire station. The new building should be ready by late spring 2009.

A couple of restaurant news items: There have been several failed attempts in recent years to get a restaurant going at the Pecos Trail Inn. The owners seem to have found the right tenant with Real Burger, judging by the crowds at lunchtime. The Santa Fe company is more than 30 years old.

Downtown, the Palacio Francisco Building, which formerly held Tribes Coffee House and Downtown Subscription before that, has been leased to a restaurant, said John Barker. The name is still a secret, but Barker said the restaurant will be 5,000 square feet and will offer Southwestern fare. They hope to open in the spring.

What of the old St. Catherine Indian School campus? The historic buildings and 18-acre site are currently listed for $8.6 million. Realtor Patricia Barey said the seller “is interested in a possible joint venture partnership.” Meanwhile the venerable school, founded in 1894 by Katherine Mary Drexel, a Catholic nun who was canonized in 2006, is threatened with demolition by neglect.

The commercial market in downtown Santa Fe will soon experience an unusual shift. “My partner, David Oberstein, and I know there are some big changes coming downtown because of the new Thornburg office,” Marc Bertram said. “We own Marcy Plaza and Thornburg will be vacating about 15,000 square feet there, and quite a bit more than that at First Interstate Plaza, which is managed by CB Richard Ellis.

“For any businesses that have wanted to be downtown, the next few years are going to be great time to do that.”